Philips agrees to terms of consent decree 

AMSTERDAM – Philips has agreed on the terms of a multi-year consent decree with the U.S. Food and Drug Administration related to Philips Respironics and its recall of certain sleep and respiratory care devices, providing clarity and a roadmap to demonstrate compliance and to restore the business, the company says. 

In the U.S., Respironics will continue to service sleep and respiratory care devices already with health care providers and patients, and supply accessories (including patient interfaces), consumables (including patient circuits), and replacement parts (including repair kits). 

Until the relevant requirements of the consent decree are met, however, Respironics will not sell new CPAP or BiPAP sleep therapy devices or other respiratory care devices in the U.S. 

“Patient safety and quality remain Philips’ highest priority across the company.” said Roy Jakobs. “Resolving the consequences of the Respironics recall for our patients and customers is a key focus area and I acknowledge and apologize for the distress and concern caused. We are fully committed to complying with the consent decree, which is an important step and provides a clear path forward.” 

Philips says further details will become available once the consent decree has been finalized and submitted to the relevant U.S. court for approval. 

As a result of the consent decree, Philips recorded a provision of EUR 363 million in Q4 2023 that relates to remediation activities, inventory write-downs and onerous contract provisions. In 2024, the company expects around 100 basis points of costs that relate to remediation activities and disgorgement payments for Respironics sales in the U.S. 

Philips also reported group sales of EUR 18.2 billion for 2023 and EUR 5.1 billion for the fourth quarter. It reported comparable sales growth of 7% and 3% (excluding provisions charged to sales, mainly connected to the Respironics consent decree), respectively. 

It also reported adjusted EBITDA margin increased by 10.5% of sales in 2023 and 12.5% in the fourth quarter (excluding provisions charged to sales, mainly connected to the Respironics consent decree). 

Philips reiterated its confidence in delivering the plan for 2023-25, acknowledging that uncertainties remain. For full-year 2024, it expects to deliver 3% to 5% comparable sales growth and an adjusted EBITDA margin of 11% to 11.5%.